Criticisms aimed at the perceived centralization of Ether (ETH) staking pools may finally be quelled by an alternative staking infrastructure that aims to improve private key security and reduce validator downtimes and slashing penalties.

Speaking exclusively to Cointelegraph, SSV.network founder Alon Muroch outlined how the platformsdistributed validator technology (DVT), developed in partnership with the Ethereum Foundation, can help decentralize ETH staking pools and validators.

SSV.networklaunched its public mainnet with more than 10 staking decentralized applications deploying their platforms on the network on Sept. 14.DVT is intended to decentralize the current landscape of staking providers, which is currently dominated by a handful of ETH staking pools that command a significant share of ETH locked in the Eth2 staking contract.

Related:SSV launches $50M ecosystem fund to support ETH staking tech

According to Muroch, the technology is an approach to validator security that spreads out key management and signing responsibilities across multiple parties, reducing single points of failure and increasing validator resiliency.

The technology splits a private key used to secure a validator across a cluster of computers. This increases security and allows for some nodes of a validator cluster to go offline, which also reduces single points of failure from the network and makes validator sets more robust.

Data from blockchain analytics firm Nansen shows that Lido Finance accounts for 32% of ETH locked in the Beacon Chain deposit contract. ETH staking pools offered by Coinbase (8%) and Binance (4%) also command a significant share of staked ETH.

As SVV noted in an announcement marking the mainnet launch, centralized exchanges such as Coinbase, Binance and Kraken hold around 18% of the total staked ETH, while liquid-taking pools like Lido, RocketPool, Stader and Stakewise account for over 36% of the total market share.

Liquid staking pools became hugely popular in the build-up to Ethereums anticipated Shanghai upgrade in July 2023. The event introduced the ability for Ethereum users to withdraw staked ETH from the Beacon contract for the first time.

SSV intends to offer alternative liquid and centralized staking pools, which it describes as fundamentally centralized and custodial. Muroch added that SSV can significantly increase validator private key security and maximize rewards through high performance and a fault-tolerant setup that stops slashing penalties for offline validators.

SSV.network grabbed headlines inJanuary 2023when it launched a $50 million ecosystem fund to support other projects developing using DVT. The technology was previously highlighted as an important aspect of Ethereums scaling roadmap laid out by co-founder Vitalik Buterin in December 2021.

Magazine:Are DAOs overhyped and unworkable? Lessons from the front lines

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SSV.network hits mainnet to increase decentralization of Ethereum ... - Cointelegraph

Ask 10 different people to define a decentralized autonomous organization (DAO), and youll likely get 10 different definitions. But there is at least one thing most agree on: DAO governance is a mess. At best, its an experiment in the works.

According to DeepDAO, DAOs today handle a whopping $17.2 billion in value. Yet many DAOs managing millions of dollars have proven hopeless at heeding even the most basic of lessons in business management 101. One does not have to look too far in the annals of crypto history to recall major DAO catastrophes.

Recall Wonderland DAO, an Olympus fork that birthed arguably one of the most notorious scandals in DAO history. At its peak, Wonderland enjoyed a near $2 billion in total value locked, which came to a skidding halt in January 2022 when its treasury manager who went by the pseudonym 0xSifu turned out to be none other than Michael Patryn, co-founder of the failed crypto exchange QuadrigaCX and a convicted criminal for financial fraud.

Or consider a more recent exploit with the Solana-based trading protocol Mango Markets. In October, attackers exploited the DAOs loosely governed parameters to acquire a disproportionate chunk of the DAOs MNGO tokens. In an absurd turn of events, the attacker proceeded to propose on governance forums an offer to return half their heist in exchange for the DAO not to prosecute him, then voted Yes on it with the stolen tokens. The vote eventually failed, but Mango still ended up paying off $47 million to the attacker.

Case studies of DAO failures are not exclusive to outrageous one-off spectacles like the ones above. Despite the Libertarian rhetoric of self-sovereignty and self-custody, dozens of DAOs that kept their monies on centralized exchanges also saw their treasuries implode during the carnage of 2022s blow-ups like FTX.

The truth is, DAO governance isnt easy. Founders have to balance a multitude of priorities, like solving voter apathy, committing to decentralization and product market fit. A best practices manual doesnt exist, and where there is one, its not widely shared.

The good news? Die-hard DAOists are hard at work to rid these problems, one experiment at a time.

Take voter apathy, for instance, arguably DAO governances most widespread problem. As a decentralized community, tokenholders must vote if they desire resilient protocols. But token holders dont vote because it takes time. When voters do turn up at the voting booth, or Snapshot, they lack the expertise or context to make an informed decision. Worse still, voters who care may not even be aware of a vote until its over.

To combat voter apathy, a burgeoning landscape of DAO infrastructure tools has been developing tools to streamline DAO voting into one-stop platforms. Products such as Senate and Goverland are trying to aggregate governance proposals across dozens of DAOs with direct integration on popular voting platforms, such as Snapshot and Tally.

Senate founder Paulo Fonseca tells Magazine, At present, its cumbersome for most DAOs to see off-chain and on-chain voting separately on different platforms. One of our products key value-adds is simply for users to consume all the information on one page.

Because governance proposals typically open to vote for a limited duration, Goverland, in turn, is putting a strong emphasis on mobile integration so voters are notified in time. It all starts with an in-time notification. With mobile, its far more convenient to help boost voter participation, Goverland founder Andrey Scherbovich tells Magazine.

Others believe that for DAO governance to improve, it needs to go beyond pure token-based voting based on duty. JokeRace, a voting protocol that aims to make governance fun, was designed with this goal in mind.

Instead of expecting thousands of tokenholders to vote, JokeRace is exploring the use of incentivized contests that allow governors to gate voting proposals in any way possible via a highly customizable allowlist, from a fully public forum to select DAO participants. Co-founder Sean McCaffery tells Magazine:

Many DAO projects want to give non-financial utility to their token. What we are doing is opening a horizon on top of simple token voting and incentivizing people to hold tokens for more than just speculative reasons.

For a highly technical proposal that wants to draw on the wisdom of experts or loyal fans, a creator can gate the vote around criteria, such as minimum liquidity provision for three months or holders who have held the token for at least a year. It enables everything from low-commit fun GM contests to serious proposals where only active contributing DAO participants can vote, they add.

In short, JokeRace strives to reimagine governance right down to the bottom social layer.

To thwart low voter turnouts, DAOs are also turning to the real world of public governance for wisdom. One such tried-and-true method that has caught on in the past year is delegation, where tokenholders entrust voting rights to delegated politicians or stewards who would vote on their behalf.

From a PR perspective, delegation is nice in that DAOs get to have their cake and eat it, too. It allows the DAO to scale faster without having to pass all decisions through months of debate. DAOs also get to deflect the criticism of insufficient decentralization since tokenholders are technically expressing a demonstrated preference to vote, albeit indirectly.

Most major DAOs today have embraced delegation voting, and while its helped voter apathy to some extent, its hardly a silver bullet. Delegation voting in itself has surfaced with problems. For instance, delegation can descend into a popularity contest where voters simply assign tokens to popular Twitter influencers or familiar company names.

An experiment that could be worth trying is to have delegates vote specifically on their domain expertise rather than making them responsible for voting on every single DAO decision which range from complex technology to finance too wide of a range for robust decision making, Kate Beecroft, governance lead at Centrifuge, tells Magazine.

Moreover, delegate voting suffers from apathy in itself. Delegates themselves dont turn up on election day. According to Karmas research, at least 53% of delegates in major DAOs have failed to even cast a single vote. Or it could lead to situations where voting decisions are the result of collusion made behind closed doors for mutual political gain.

For instance, a16z famously delegates voting powers to blockchain university clubs. While the venture fund claims that student clubs are free to participate in governance however they see fit, its not immediately clear what the relationship between these entities is.

Gitcoin founder Kevin Owocki insists that delegating voting is a step forward for DAO governance but also acknowledges its shortcomings. Gitcoin launched a fairly egalitarian airdrop to around 25,500 holders in 2021, but its decision to incorporate delegate voting saw a concentration of voting power back into the hands of only about 100 delegates. On top of that, delegates cycle in and out of activity over time, and even getting tokenholders to reallocate their delegation from inactive delegates every half a year was difficult.

The problem that confronted us was keeping delegates engaged, accountable and slowly changing the DAO into a liquid democracy of dedicated Gitcoin community members that cared about our core vision of decentralized public funding, Owocki states.

These problems are being recognized by builders in the DAO tooling, trying to improve delegate accountability. For example, tools like Karma have emerged to create transparency around delegation voting by aggregating all the information about delegates, including their voting weight, forum activity and voting history, on one page.

The DAOmeter dashboard, a DAO maturity rating index by StableLab, also serves as a useful DAO public good for assessing the decentralization journey of DAOs.

StableLab founder Gustav Arentoft tells Magazine, During the bull market, lots of DeFi DAOs branding themselves as decentralized finance suffered exploits because they lacked even basic governance. The operational structure of these protocols was extremely opaque. As an individual, assessing the decentralization of DAOs was difficult and requires some form of standardized parameters, which is what DAOmeter tries to provide.

Ultimately, despite the popular notion that DAOs are autonomous, the reality is that much of it can never be fully autonomous and enforceable on-chain.

You can have all the on-chain votes youd like, but lots of DAO operations come down to the social layer. Who owns the GitHub account? Who controls the DNS [domain name system]? Who is in-charge of handing over a password to the elected personnel? says JokeRaces McCaffery.

While DAOs struggle to decentralize, many seem to forget that they are still fundamentally profit-oriented organizations. That means that DAOs cant afford to forget about revenue and growth.

To scale, DAOs centralize some decision-making in the hands of experts. One trendy idea in the past year that DAOs have been experimenting with is working groups. In DAO nomenclature, they also go by subDAOs. Metropolis (previously Orca Protocol) calls them pods. Maker calls them core units, and Gitcoin calls them workstreams.

These structures resemble the ubiquitous M-shaped organizational structures in modern capitalism today. Historically, the capitalist firm was a centralized U-shaped firm with decision-making power concentrated in the hands of a few top executives. As the firm expanded into regional markets, it grew increasingly incapable of managing the rapidly increasing scope of complex administrative decisions.

To remain nimble and adapt as the firm grew, the modern capitalist firm underwent a structural decentralization, empowering mid-level managers with the autonomy to run the local branch as they deem fit. Pioneered by General Motors president Alfred Sloan in the 1920s, this crucial organizational innovation allowed firms to overcome knowledge problems and also aligned the incentives and rewards to lower management, effectively allowing them to work as mini-entrepreneurs within a large corporation.

DAOs are witnessing the same tendency toward a similar organizational structure, except that its evolving bottom-up from a dispersed, decentralized status quo.

James Waugh, co-founder of Fire Eyes DAO, tells Magazine, In advising many DAOs, we sometimes recommend the setup of working groups to focus on certain areas that are hypercritical, particularly those involving technical work where smart contracts need timely upgrading.

Yet its entirely common for redundant working groups to exist and to be a complete waste of time, however. Whether or not theyre efficient really depends on the kinds of people in them.

Decentralization maxis also complain that too many working groups and managerial experts might mean less transparency over how DAOs operate. Its a complaint that isnt completely without merit.

In the early days of Bankless DAO, many internal project managers requested for funds then delivered work of questionable value. We implemented a variety of solutions like reputational systems within Discord, KPI-based funding and timelocks to deter rent seeking, Frogmonkee, an early core contributor of Bankless DAO, tells Magazine.

Ultimately, DAO governance boils down to the fact that DAOs are made up of a pluralistic archipelago of individuals with different value preferences and priorities. Some wish to pump their holdings in the short-term, while others are interested in the long-term health of the project. Some are genuinely altruistic actors, and then there are delegates exchanging favors under the table by agreeing to vote on each others proposals.

In such a marketplace of conflicting values, a clear separation of powers can help foil potential insider collusion. Some DAOs are actively experimenting with such dual governance models, such as Optimisms Token House and Citizen House. OP tokenholders and delegates occupy the former, while the latter is an identity-based community of citizens with soulbound tokens that acts as a check and balance on the Token House.

Shawn Grubb, a delegate at Gitcoin, tells Magazine, Optimisms experiment with bicameral houses is a smart way to segregate the various stakeholder groups: the tokenholders who care about pumping their bags, the active contributors with a job, and the broader community who believes in Optimism and seeks project funding. The key is balancing the power of different stakeholder groups rather than the plutocratic status quo, where plutocratic tokenholders reserve only the power.

Optimism isnt alone. In recent months, a group of Lido insiders have taken it upon themselves to push for a similar dual-governance model. The problem stems from Lidos wildly successful liquid staking product, stETH, which controls a market share of 32% staked ETH. This poses a looming threat to the underlying security of the Ethereum layer 1, as it comes dangerously close to the 33% consensus threshold, which could theoretically allow Lido to exercise control over Ethereums consensus layer. In June 2022, Lido DAO proved that self-regulation was not forthcoming after it unanimously shot down a vote to self-limit its stake flow.

Lidos proposed dual governance structure would, in theory, bring the DAO back into alignment with the interests of the Ethereum protocol. This is done by granting Lido users (stETH holders) veto power against the DAO, a feature that competitor liquid staking protocol Yearn.finance has also implemented.

For Lido, dual governance (and implementing staking routers) should be its next logical steps. It alleviates many of the current concerns around the DAO, said Hasu on the Bell Curve podcast.

In sum, DAO governance isnt easy. Driving growth while committing to decentralization is no small feat, and it will take many years before governance reaches equilibrium.

Yet the philosophical principles that blockchain organizations embody decentralization, transparency, egalitarianism are all values very much worth striving for. After all, its unheard of for a multimillion-dollar company in the traditional business world to be debating operational strategies openly on a forum or that allows anyone to enter and begin contributing without going through a tedious interview process.

Even in its imperfect state, the open and transparent context in which DAOs operate is perhaps the biggest bulwark against the centralization of power.

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Based in Singapore, Donovan Choy previously wrote about crypto for the Bankless newsletter. He published his first book 'Liberalism Unveiled' in 2021, an analysis of Singapore's political economy. He enjoys satire, spaghetti Westerns and the Wu-Tang Clan.

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Are DAOs overhyped and unworkable? Lessons from the front lines - Cointelegraph

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Best Crypto Investment in 2023: A Potential to Earn 10x Returns with ... - Tekedia

This week for the crypto sector was as hot as ever. The crypto space saw concerns arising after Ethereums decentralization given the steady rise in staking by liquidity stakers. And self-limiting proposals like remedies also took-off. Ethereum ETFs have also entered the mainstream discussion since the ARK 21Shares and VanEcks filings.

U.S. regulator, Securities and Exchange Commission was also in the highlights of this week, primarily due to the challenges it is expected to face in the future. Blockchain services provider LBRY appealed in the court for the case it lost against SEC. While Congressman Tom Emmer proposed to restrict the regulators fundings until it comes up with clear crypto regulations.

Liquid staking protocols do not follow any staking limit per se and this could be a cause of concern for the community. Ethereum Beacon chain community health consultant, Superphiz, suggested self-limiting to ETH stakers to curb the growing centralization.

He recently informed that prominent stakers including Rocket Pool, StakeWise, Stader Labs, and Diva Staking agreed to the self-limit rule. However, the centralization concern is still looming over Ethereum since the biggest ETH staker is at alarming staking capacity.

Lido Finance, the biggest Etheruem staking protocol, is currently holding nearly 33% of all the staked ETH. This concern becomes more dreadful due to the protocols community not being in favor of applying the self-limiting rule.

Cryptocurrency exchange-traded funds have turned into serious investment vehicles, especially the much awaited spot Bitcoin ETFs. It isnt surprising that the community wants Ethereum to be part of the action as well.

ARK 21Shares and VanEck reported to file for spot Ethereum ETFs with the Securities and Exchange Commission (SEC).

James Seyffart, an ETF analyst at Bloomberg, emphasized the significance of 19b-4 filings compared to previous S-1 filings. He pointed out that these 19b-4 filings are expected to give the race for Ethereum (ETH) ETFs a head start, similar to what was observed with spot Bitcoin filings. This suggests that the regulatory process and filings are crucial factors in the competition to launch ETFs for different cryptocurrencies.

Blockchain-based company LBRY, which lost a legal battle against the SEC in July 2023 over the sale of unregistered securities, is now appealing the courts decision. They filed an appeal notice with the United States Court of Appeals for the First Circuit on September 7, 2023. The court had ordered LBRY to pay a civil penalty and cease offering unregistered crypto asset securities.

LBRYs decision to appeal coincides with recent wins by crypto entities like Ripple and Grayscale in cases against the SEC. LBRY hopes for a similar outcome as Ripples case, but legal experts note that each lawsuit is unique, and the fate of LBRY remains uncertain until further updates.

U.S. Representative Tom Emmer has criticized the SEC and its Chair, Gary Gensler, for their actions in the crypto space, calling it an abuse of power. Emmer has proposed restricting the agencys finances until clear crypto regulations are established, citing concerns about misuse of taxpayer funds. He aims to prevent the SEC from using funds for enforcement actions on digital assets and companies. Emmer, a pro-crypto Republican, believes Gensler has exceeded his authority.

Emmers proposal includes adding an amendment to oversee the SECs funding, ensuring restrictions on the agency and its Chair until comprehensive regulations are in place. This aligns with the growing debate among lawmakers, with some advocating for clearer crypto regulations and others supporting the SECs actions.

Additionally, key figures in the blockchain industry, including Kristin Smith and Sheila Warren, have supported this legislation. Emmers stance mirrors that of SEC Commissioner Hester Pierce (Crypto Mom), while Democratic Congressman Ritchie Torres urges Gensler to follow recent court rulings in crypto-related cases. The political landscapes potential impact on crypto regulation remains a subject of interest, with discussions surrounding the 2024 elections and their potential influence on the industry.

Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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Ethereum Decentralization, ETFs, & Challenges for SEC: Weekly ... - The Coin Republic